Dependence drives American decline
America is in a decline for many purposes but many are tied to our dependence on cheap goods and our large debt that is primarily owned by foreign countries. The rampant debt is providing countries a huge advantage when it comes to negotiations in foreign policy with the US. The second issue with foreign investors of US debt is if they decide to diversify their investments elsewhere, it could spell an economic crisis.
According to John Maggs, the amount of foreign holdings of US treasury debt has increased almost 50 percent to amount equaling more than $2 trillion, which is over 40 percent of Treasury debt held by the public (Maggs, 2007). Japan is the leader with 31 percent holdings versus China’s 19 percent in 2006. To add to this foreign countries have doubled the amount of bonds they purchase to an amount of $1.2 trillion. Part of the other decline in the US is reliance on cheap goods and labor, which has created a large demand for migrant workers.
America has increasingly relied on migrant workers to handle mediocre jobs that pay little money and farmers rely on them heavily to ease their financial burdens. Illegal immigrants are an increasing problem because there is little that the US can do to track them and it hurts the tax base of many cities. The answer to this problem has been mainly domestic solutions such as building fences and providing amnesty, which is the heart of the issue. According to Tim Padgett, “immigration is not domestic policy; it’s foreign policy.” (Padgett, 2007, 12)
Trade agreements such as NAFTA have increased the amount of Mexican imports from $40 billion to about $200 billion but the share of this wealth has gone to Mexico’s richest 10 percent while the poorest 10 percent income has dropped significantly. (Padgett, 2007, 15) The Mexican elite have monopolies and oligopolies on every sector of business. The driving factor for Mexicans coming to the US is the severe poverty where an average Mexican worker makes around $1 dollar a day. By the US investing on correcting the main cause of illegal immigration would stem the flow and cause these workers to want to return to Mexico for good. The US should do more to break up the stranglehold on Mexican businesses and take an example from the rebuilding of Iraq, which provided microloans to stimulate small business and get the Mexican economy back on the rebound.
There truly is not a country that can single handedly be a rival to the US, but the reality is if the economy is allowed to go on unchecked, it will usher in rivals. It is apparent that the US is the biggest threat to its future and corrective action not band-aids will fix the problems.
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